Government provides $40m to subsidise mediation and arbitration in Covid commercial rent disputes

The Government is providing $40 million to subsidise mediation and arbitration to resolve rent disputes between tenants and landlords caused by the trading restrictions during the Covid-19 alert levels 3 and 4 lockdowns.

Martin De Ruyter/Stuff

The Government is providing $40 million to subsidise mediation and arbitration to resolve rent disputes between tenants and landlords caused by the trading restrictions during the Covid-19 alert levels 3 and 4 lockdowns.

Commercial tenants and landlords at loggerheads over rent relief during Covid-19 lockdowns can now get subsidised help to resolve their battles from a new $40 million Government fund.

The subsidised services are available for six months from September 25, 2020 to the end of March 2021.

The Ministry has selected three disputes resolution companies to provide the services, and each of the companies’ websites has information for tenants and landlords on the process and access to the services.

They are Immediation NZ, Fairway Resolution and New Zealand Dispute Resolution Centre.

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The three ministry-approved suppliers of the services receive the subsidy and tenants and landlords apply for the services by contacting one of the three.

The $40m Government service was signalled a few weeks ago after New Zealand First refused to support the first proposed subsidised commercial rent disputes resolution scheme, costing the same amount.

That one would have forced landlords and tenants who could not agree on rent relief into arbitration through the Government amending the Property Law Act to require a fair reduction in rent where a business had suffered a loss of revenue during the Covid-19 lockdowns. But NZ First pulled the plug on its support for that one.

The subsidised mediation and arbitration service is voluntary where landlord and tenant have to agree to take part.

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The subsidised mediation and arbitration service is voluntary where landlord and tenant have to agree to take part.

This subsidised service however is voluntary, meaning the landlord and tenant have to agree to take part, so big landlords cannot be forced into either mediation or arbitration.

To be eligible for the subsidised mediation or arbitration service the parties cannot have already come to an agreement about rent relief for the weeks of the alert level 4 and 3 lockdowns when most businesses could not trade.

Tenants eligible for the subsidy service have to have had a significant decline in revenue during the lockdowns or have received the wage subsidy or an extension to the wage subsidy.

In addition, at least one party needs to be New Zealand based and have 20 or fewer full-time equivalent staff per lease site.

Well-known QC Michael Heron, who founded CODR, a Kiwi online dispute resolution company, has partnered with Australian online dispute resolution company Immediation founded by barrister Laura Keily to provide an online mediation and arbitration service, Immediation NZ, one of the three chosen by the justice ministry to provide the service.

Keily said with Immediation NZ the whole process could be done online. That meant information exchange and signing of any documents as well as the mediation negotiations or the arbitration hearing were done online.

The settlement agreement was also done online. The parties could co-draft the commercial terms of the settlement, then they hit ‘sign’ and the document agreement was created online and signed electronically “on the spot”.

Michael Heron QC and Australian lawyer Laura Keily have partnered to provide an online mediation and arbitration service, called Immediation, for commercial tenants and landlords who are eligible for the subsidised service. Immediation is one of three companies selected by the Ministry of Justice to provide the subsidised service.

Jason Dorday/Stuff

Michael Heron QC and Australian lawyer Laura Keily have partnered to provide an online mediation and arbitration service, called Immediation, for commercial tenants and landlords who are eligible for the subsidised service. Immediation is one of three companies selected by the Ministry of Justice to provide the subsidised service.

She launched the Immediation platform a year ago so it was tried and tested, Keily said. Covid restrictions had given it a tailwind and it had been used by the Australian judiciary in the Federal Court of Australia and by the Victorian Civil and Administrative Tribunal in Victoria.

The parties to mediation, including lawyers, did not have to be in the same location.

On Immediation’s platform they could check the eligibility criteria and go through the first couple of steps entirely online. They could also ring and speak to staff at Immediation, she said.

Heron said once one party, either the tenant or landlord, met the eligibility criteria then both were deemed to be eligible for the subsidised service. He has assembled a panel of local mediators and arbitrators to provide the service.

“If you are a tenant and you meet the criteria then you have an eligible dispute. If you are a landlord and you meet the criteria, it doesn’t matter how big the tenant is,” Heron said.

It was a free service so the parties who had not agreed on rent relief so far would be crazy not to use it if they were eligible, he said.

Heron said it was a “pretty significant scheme” provided by the Government.

“The Government to its credit is really thinking outside the square here,” he said.

Arbitration services will be subsidised up to $6000 (including GST) per dispute. Participants need to fund any remaining costs of the service up to a maximum of $2000, the Ministry of Justice website says.

Mediation services will be fully funded, up to a value of $4000 (including GST) per dispute.

Stuff

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tianze.zhang@graduateinstitute.ch